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May 22, 2008

Hey Buddy - Would You Quit for $1,000?

Many companies pay a hiring bonus to new hires but it seems that one company is actually paying new hires a bonus to quit. That’s right, a bonus for a new hire who quits.

Fast Company co-founder Bill Taylor writes at Harvard Business Online that internet shoe retailer Zappos is so focused on hiring and keeping employees who are committed to the company’s strategy and obsession with great customer service that they actually offer new hires a $1,000 bonus to leave.

Because if you’re willing to take the company up on the offer, you obviously don’t have the sense of commitment they are looking for. It’s hard to describe the level of energy in the Zappos culture—which means, by definition, it’s not for everybody. Zappos wants to learn if there’s a bad fit between what makes the organization tick and what makes individual employees tick—and it’s willing to pay to learn sooner rather than later. (About ten percent of new call-center employees take the money and run.)

Think about how much money this small bonus saves them! An employee who isn’t really committed to a job but continues to work in the position is unlikely to deliver exceptional customer service. This will cost the company sales and, even worse, cost them customers. Since an un-committed employee is unlikely to stay in the position long-term the company will still have to incur the cost of replacing and training a replacement.

And a company that pays someone to leave early is far less likely to incur the cost of losing sales and customers. Sounds like a smart investment. Remember, we’re not talking about employees who couldn’t make it past their initial 90-days. Zappos is using the bonus to identify and remove those employees who are able to do the job but aren’t committed to it.

I think this is brilliant. It sounds like something other retailers might want to explore.

So would this work in retail or would too many people try to get hired just to get the bonus to leave? Things that make you go “hmmm.”